George Osborne is extreme and at the margins, Labour is now the centre ground – my article in the Guardian

There are moments in politics when, amid the fog of accusation and rebuttal, things suddenly become crystal clear.

I remember well the speech in summer 2000 when the shadow chancellor, Michael Portillo, set out Conservative plans to cut public spending to fund tax cuts – the moment we knew they had lost the 2001 election.

Or the day in September 2007, walking through Leeds city centre, when I saw a long queue of people waiting outside Northern Rock to take out their money – and knew the global financial crisis had become real for working people.

It’s now clear that last month’s autumn statement was another of those defining moments – the day the chancellor, George Osborne, ceded the political centre ground to Labour.

In the runup to the autumn statement, we all knew the ongoing squeeze on living standards was leading to a huge shortfall in tax revenues, throwing deficit reduction plans badly off track.

What took everyone by surprise was that, in the face of forecasts that this loss of tax revenues would continue, Osborne would choose to make up the shortfall with massively deeper spending cuts in the next parliament.

While he lashed out at the BBC for reporting the facts, the Institute for Fiscal Studies said these plans would mean “colossal cuts” to public services and the Office for Budget Responsibility concluded they would take public spending as a share of GDP back to 1930s levels.

That morning, in the Today programme studio, Jim Naughtie asked whether Labour would match these cuts. I think he expected me to qualify my response. And I can clearly remember his look of surprise when I replied “absolutely not”.

Let me be clear, including to those who would wish it were not so: Labour will need to cut public spending in the next parliament to balance the books. But Ed Miliband and I do not believe a 35% state can be sustained without causing huge damage to our NHS, policing, defence, local services and economic infrastructure.

Osborne’s increasingly extreme and ideological approach goes far beyond the necessary task of deficit reduction. It is a risky second-term Conservative project to shrink the state – a lurch to the right which has left Labour as the centre-ground alternative.

So the economic choice at the election is now stark and clear. Do we adopt a Labour plan to change our economy, so that it works for working people again and to get the deficit down in a tough and balanced way? Or do we carry on with the same failed Tory policies and slash public services to a level of national income last seen in the 1930s?

This choice is not about whether to get the deficit down. All the main parties are committed to balancing the books in the next parliament – whatever the smears from David Cameron. But only Labour has a plan which is tough and deliverable, balanced and fair.

We will cut the deficit every year, and get the current budget into surplus – and national debt falling – as soon as possible in the next parliament. But we will take a different approach to the Tories.

We will reverse the £3bn a year tax cut the Tories and Lib Dems have given the top 1% of earners, and put saving our NHS at the heart of Labour’s first budget with our plan to raise an extra £2.5bn a year. We will also scrap the winter fuel allowance for the richest pensioners and cap child benefit rises at 1%.

Our review of every pound spent by government is finding savings that can be made in order to better protect frontline services, including £250m in policing and over half a billion in local government. And in the coming weeks my shadow cabinet colleagues will set out further details of the savings they have identified and the reforms they will make.

But only an economic plan that has rising living standards for all at its heart will deliver the tax revenues that are essential for getting the deficit down in a fair way.

That’s why Labour’s plan to change our economy – including raising the minimum wage, increasing apprenticeships, getting more homes built and reforming the banks – is a vital part of our plan to balance the books.

Osborne and David Cameron say the election will be about economic competence. But there is nothing competent about borrowing over £200bn more than planned because of your failure to deliver a recovery that is felt by all working people and not just a few at the top.

It is Osborne who now faces a credibility problem. His original strategy – to balance the books by this year and go into the election having delivered tax cuts – lies in tatters. Instead he has gambled on people supporting a dramatic shrinking of the state and a £7bn promise of unfunded tax cuts which could be paid for only by another VAT rise or even deeper cuts to public services – or both. In contrast, Labour is now the only main political party that has not made any unfunded tax or spending commitments.

At the start of 2015, we face the most important general election of my adult lifetime. I relish the debate to come. Because I don’t believe the British people will let Osborne gamble with our future.​

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Posted January 2nd, 2015 by Ed

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